The global economy slowed in September for a fourth straight month, Goldman Sachs said. Goldman’s Global Leading Indicator index showed a 4.6% gain from year-ago levels, down from 5.9% in August. The index tracks 10 data series ranging from shipping costs and manufacturing orders to metals prices.

But the firm, which has been predicting the Federal Reserve will soon begin another round of Treasury purchases to prop up a sluggish economy, said it still doesn’t expect the economy to fall on its face.

“While our U.S. forecast remains below consensus, we do not envisage a sharp slowdown in global growth,” Goldman economist Dominic Wilson writes. “We remain cautious, however, given the moderation in economic data over the past few months, as reflected in the fourth consecutive negative momentum reading.”

The firm said half the indicators advanced last month and half declined. The Baltic Dry Index of bulk shipping costs, an index of the Australian and Canadian dollars and the Goldman Sachs industrial metals index were among the gainers, while the global purchasing managers index and global new orders less inventories were among decliners.

The firm has been saying for much of 2010 that it expected the global recovery to taper off without giving way to another recession. “The deceleration is generally only a clear negative event if the slowdown is severe,” Wilson wrote in a report this summer.

Goldman reckoned in that report that signs of a global slowdown would push bond prices higher, as they have, though not all the firm’s predictions have come to pass.

Wilson also suggested that declining growth indicators could hit stocks and make the stock market more volatile – which hasn’t been the case, as illustrated by the flat line on the CBOE volatility index (see chart above). But then, October is only beginning.

(via Business Insider)